Adeyemi Ilori Adekoya, astute administrator, insurance broker, is Group Managing Director/Chief Executive, First Dominion Insurance Brokers Limited, a frontline insurance brokerage firm. In this interview with Ibrahim Apekhade Yusuf, he speaks on the prospects and challenges of insurance vis-à-vis the operating environment, development in the sector, his management style, among others. Excerpts:
Foray into insurance sub-sector
I have been in the insurance sub-sector for 30 years.
First Dominion Insurance Brokers Limited is a brokering outfit. We’re into insurance business and we’re the intermediary between the clients and the insurance companies.
First Dominion Insurance Brokers Limited was registered in May 1987 as James Sanfol Insurance Brokers Unlimited. It commenced operations on 1st July of same year. But I acquired the company in 1998.
The company which is registered with a share capital of N100,000.00 had its capital increased to N250,000.00 in 1991. In line with the provision of the 1997 Insurance Decree, which prescribed a minimum share capital of N5 million for Insurance Brokers, the capital base of the company was further increased to N5,000,000.00 in November 1998. As at date, the share capital of the company is N20million and fully paid-up.
The company has a professional indemnity cover for N250 million, more than the N5million required by law. This policy guarantees indemnity against legal liability to pay any claim attributed to professional negligence that may result from the activities of our employees.
In September 1999, the company changed its name from James Sanfol to First Dominion to reflect the new ownership structure of the company and a deliberate marketing strategy at repositioning the company for efficient service delivery to our numerous and cherished clients nationwide.
As I said earlier, I myself have been in the insurance industry, so when I came out I acquired the company and then restructured it. I took over formally in 2001. I had people running it before I came on board. I have been the CEO for the past 14 years.
Insurance as a hard sell
Yes, it is a hard sell. My assessment of why I think insurance sector is a hard sell is that I think it’s because in the past people have not been working hard enough to sell insurance. People were laidback and expected clients to come and see what’s available. But actually, that is the reason for a broker. The insurance broker is really the one that interfaces with the clients. Just like lawyers, the insurance brokers serve the interest of their clients, in terms of equal representation, educate them, and then we take insurance to their doorsteps.
We also let them know that they don’t just walk up to an insurance company and say ‘I want to take this cover’ without necessarily knowing all the intricacies and all the rest of them. It is we the brokers that would tell them this is what is required, this is what you don’t need, this is what you should pay and vice versa. And when you have claims, we make sure that you get the value for that claim.
Claim settlement as bane of insurance
Insurance companies don’t ask anything out of this world. It is just due to the level of ignorance in the society. You see, when you’re taking up an insurance cover, you just have to go through an expert. There are conditions precedent that determine what you get in an insurance cover or claim as the case may be. When there is a claim, there are conditions precedent to the settlement of those claims. There are certain pieces of information you need to provide, you’re in possession of those information so you need to provide them. But then, when you have a broker that is not job, it is your broker that would run around for you and put all these things together.
So, you don’t have to read the small print, you don’t have to bother yourself about the policy statement. It is your broker who will make sure that your interest is covered in that policy document and when there is anything, they take care of it. You just sit back and get your cheque. That’s all.
Capitalisation in the insurance sector
I want to say that the level of capitalisation in the insurance sector is inadequate now. We’re talking about N3billion for general business, N5billion for composite business ventures. If you compare that to the recapitalisation in the banking sector, it is low. And that is why we don’t have capacity to underwrite certain risks 100 per cent in Nigeria like the oil and gas sector, aviation sector, instance, etc. Basically, we do about three per cent. The rest are all reinsured abroad. So, with N5billion, how can you go and take up a risk that is worth hundreds of millions of dollars? That is not just possible. So, we don’t have that capacity locally, hence, there is a lot of capital flight. So, in my own opinion, I think that the issue of a robust capital base in the insurance sector needs to be readdressed. There is need to jack up the capital base, otherwise we’re not in business.
But if we must recapitalise, it is not something you can do spontaneously. It has to be structured somehow. It is something you have to take up gradually. You can have a kind of five years development plan aimed at the growth of the insurance industry and you say okay, in the next five years, this is what we want to achieve and so on and so forth. We should look forward to companies within the sub-region coming to us to insure their businesses.
Management style
You see, first and foremost, it is not easy. We have a set up in the six geo-political zones in the country. You see, one thing is this: insurance is my profession, I have passion for it. I don’t have any other business besides insurance. So, if I must do and I must earn a living from it, take care of my responsibilities, I need to do it right. Though I must confess, it has not been easy at all. But there is no alternative to it. Winning secrets
Well, there is no winning secret other than the fact that we try to do the right thing at the right time. At First Dominion Insurance Brokers Limited, service is our watchword. You see, when you give good service to a customer, they will always come back and will often refer others to you, that is just the secret.
Turnover
Well, that’s a tough one but I can say something without necessarily disclosing it. Any insurance brokerage firm that is worth its salt and has been in business for 28 years, that is doing less than N100million per annum, should think twice. I don’t see any future for it. So, I think that answers your question. (Laughs).
Staff motivation
I apply the stick and carrot approach. You see, insurance business is a marketing-oriented business. It’s unlike civil service where oga ta, oga ota, owo alaru a pe (translated to mean, whether there is sale or not, you must pay workers). This one, it is work and eat. What you produce is what you get. So, if you work extra hard in addition to your salary, you get a competitive bonus. So, if you don’t, you’re home and dry.
Toughest decision as CEO
The toughest decision I have had to take over the years is not sacking anybody. But, of course, I will encourage you to find another greener pasture if you know that you cannot put in your best. I sit down with you and discuss fruitfully. Of course, a relationship you have built over the years, it would be very difficult for you. So, that’s why it’s very difficult for me to sack people. I sit down with you and advice and say, ‘look you’re not really putting in your best’.
Succession plan
Of course, I do. Most insurance brokering outfits operating in the country today, about 600 of them, most of them are what you can call portfolio companies, they are just one-man businesses. They’re just in one room or they don’t even have office at all. If one has taken the pains to open offices in the six geo-political zones across the country and you have employees, and you have opened up your shares to members of the public, north, south, east and west, it means that yes, you have a succession plan and you want that company to survive you; you want the company to be a continuous business venture. So that is just it. So I believe that just like European and American companies, I’m already envisaging what First Dominion Insurance Brokers Limited will be in the next 10-20 years.